DEALBOOK; Reflecting On Buffett, Business And Politics

By ANDREW ROSS SORKIN

Published: May 8, 2012

OMAHA -- ''When Charlie and I took this job, we did not agree to put our citizenship in a blind trust.''

That's what Warren Buffett said here over the weekend at Berkshire Hathaway's annual meeting when confronted by a shareholder question complaining that Mr. Buffett had become a public advocate for President Obama and the so-called Buffett Rule, which seeks to raise the tax rate on the wealthiest Americans - many of whom were in the audience.

It also appeared to reduce Mr. Buffett's popularity among some shareholders. His comments came after the investor had submitted a question, saying: ''My 84-year-old father won't invest in Berkshire because of your stance on taxes.'' Mr. Buffett replied with a zinger: ''Sounds like your father should buy stock in Fox.''

All of this carping raises an important question: Should corporate executives like Mr. Buffett, who run public companies, advocate personal political positions? Or, should they keep their politics to themselves?

Throughout the weekend, known as Woodstock for Capitalists, there was a low hum among some investors about Mr. Buffett's outspokenness. ''It's the elephant in the room,'' Mario Gabelli, the value investor who has been attending these meetings for years, told a roomful of investors over dinner. Ultimately, he concluded, ''I'm O.K. with it,'' he said in an interview.

Another Berkshire shareholder, however, Dave J. Weber, e-mailed me: ''Mr. Buffett has dug himself into a hole that is dangerous territory for the figurehead of a public company to be treading in.''

Whether you agree with Mr. Buffett's political positions or not, isn't it refreshing to hear a chief executive advocate for political positions that you would rarely hear out of the mouths of most of his peers? (It must be said that much of the audience at the packed arena in Omaha cheered at Mr. Buffett's political comments.)

Of course, executives frequently lobby legislators to write laws that would favor their companies and investors. And many executives participate in fund-raisers for certain politicians, even working as ''bundlers'' to raise money for a candidate. James E. Rogers, the chief executive of Duke Energy, is on the steering committee of the Democratic National Convention in Charlotte this summer. But rarely do you hear chief executives loudly advocating political positions that might upset their own constituents, especially at a corporate event like an annual meeting.

Perhaps only Mr. Buffett, with his greatest-investor-of-all-time halo, can speak so candidly. Then again, some of his critics say it's easy for him to talk; they say the tax rate is irrelevant to him because all his wealth is tied up in Berkshire and he plans to give away virtually all of it anyway.

But a former chief executive of a major corporation who attended the meeting told me he wished he could have been as outspoken as Mr. Buffett. ''I would have been a lightning rod,'' he said, explaining why he often ''muzzled'' himself.

Indeed, Mr. Buffett used part of the meeting, in which he answered questions from shareholders and a panel of analysts and journalists (I was among them), to wax on about a variety of machinations in Washington, about which many of his fellow chiefs conceivably would disagree with him.

For example, he said, ''I wish Citizens United never happened,'' referring to the Supreme Court ruling that allowed the creation of ''super PACs many of which are being supported by other billionaire executives to advocate a political position.

''The idea that I should toss $10 million into some super PAC that will spend its time misleading people about its opponent,'' Mr. Buffett continued, ''I don't want to see democracy going in that direction.''

Mr. Munger, who traditionally has been more conservative than Mr. Buffett, threw his weight behind a value-added tax, which clearly could affect Berkshire's businesses. ''I think it's going to come eventually and probably should,'' Mr. Munger said nonchalantly. ''I think it's quite logical to tax consumption.''

Mr. Buffett doesn't just appear to be advocating for higher taxes on the wealthy, he also is not campaigning for lower corporate taxes, a hobby horse of most United States executives.

''It's not a lack of capital that's holding them back,'' he said about companies' biggest problems, ''nor is it tax rates.'' He said the nation's gross domestic product continued to grow in the 1950s and 1960s, when rates were far higher.

In the midst of what is becoming a very political season, Mr. Buffett made it clear that he never considered politics when studying an investment.

''I don't know the politics of Muhtar Kent, Ken Chenault, Ginni Rometty - I don't know her politics or religion,'' referring to the chiefs of Coca-Cola, American Express and I.B.M., among Berkshire's biggest holdings. ''It doesn't make any difference and I just want to know how he or she will run the business,'' he said. ''I don't think it makes sense to make investment decisions based on politics.''

Well said.

By the way, for the curious, Mr. Buffett appeared to be in fine form, despite his recent prostate cancer diagnosis. He had as much energy as I've ever seen. He said he felt fine and he joked that he might be killed by a ''jealous husband,'' but he did not plan to die from prostate cancer. Mr. Munger, always playing the straight man, added: ''I resent all this sympathy and attention Warren is getting.''

This is a more complete version of the story than the one that appeared in print.